Making more from charity trading
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As the Social Investment Consultancy releases a report entitled Charities Unlocked, Alex Delaney looks at how charities are making more of their trading activity.
We’re all used to seeing the charity shops on our high street come and go and increasingly we’re buying Christmas cards that raise money for charity in droves. But many charities have been growing their trading arms, ensuring that they have flexibility in their income and innovative products and services to sell.
Gordon Morris, Managing Director, Age UK Enterprises says: "It’s a tough economy; fundraising is hard at the moment. I think there are real opportunities in trading, but it has to be done correctly. I would tell charities that to get it right, they need to think correctly and commercially. You need people who have a background in planning these types of activities, which can be quite different from the backgrounds you find in the third sector. But if you get the plan right, it can be a huge opportunity."
Age UK Enterprises has apparently got it right as it contributed £22.6m net to its parent charity in 2011. Age UK Enterprises may be one of the biggest charity trading arms, but according to The Social Enterprise Consultancy, 88% of charity executives interviewed, reported they were currently earning at least a portion of their income from trading activity. This accounted for 56% of the £265m across the 50 organisations interviewed for the report.
Another organisation that’s been operating with a social enterprise offer is Catch 22. Launched in 2012, Auto 22 operates in the car industry, creating an ethical market in car servicing and offering apprenticeships as well as encouraging customer business networks to take on young people. It may not be Christmas cards, but Catch 22 hopes to transform the trust and understanding of the motor trade, and to become the ‘Jamie Oliver Fifteen’ of the sector.
According to the report, the reasons that charities looked to increase sources of earned income varied, but frequent explanations included reducing a reliance on government sources of income as well as growing a reserve of unrestricted income. Exploring trading activity in particular was referenced as a potential way of generating unrestricted funds to replace a fall in unrestricted grant income that has faced organisations over the last few years, and is set to continue.
Ultimately each organisation is different and not all services are saleable in this way. But Gordon Morris says: "When we started, there were definitely people who asked why we were going into it and whether it fit with our mission — it’s not automatically a comfortable fit between running a business and having a charitable purpose. Though today I can’t think of anyone who wouldn’t support it. Over time, as we’ve demonstrated that we don’t have any tricks and we’re really putting our customers at the heart of our work, people across the organisation have really come to support it."
"Everyone has to make their own decision, but I wouldn’t want to offer products that aren’t fit for purpose. I cannot imagine many charities would want to trade in an area that was not connected to their cause. That could open them up to criticism about why they are doing it, and being solely profit-driven is not something I would expect charities would want to be."
Charities Unlocked, a guide examining current practices – is being launched today at a free event at Toynbee Hall, London.